A mortgagee lawfully in possession has, generally speaking, the rights of any owner of land for the purposes of the due management and preservation of the property, subject to the liability to redemption and accounting (k), but apart from express or statutory authority he cannot, without the mortgagor's consent, make leases which will be binding on the mortgagor after redemption (l).

(f) Williams v. Box (no. 2), 1913, 24 M.R. 31, 15 D.L.R. 261. (g) Kensington (Lord) v. Bouverie, 1855, 7 DeG. M. & G. 134, at p. 156.

(h) Trimleston (Lord) v. Hamill, 1810, 1 Ball & B. 377.

(i) Stanley v. Grundy, 1883, 22 Ch.D. 478, 3 R.C. 569; see also chapter 33, Attornment and Distress, Sec. 362.

(j) In re Alison, Johnson v. Mounsey, 1879, 11 Ch.D. 284; cf. Ashworth v. Lord, 1887, 36 Ch.D. 545.

(k) As to accounting generally, see chapter 27, supra; as to the liability for waste or deterioration, see Sec. 307, infra.

The mortgagee is entitled to take the rents and profits by virtue of the legal ownership or equitable interest which the mortgage confers upon him (m). The rents received by the mortgagee are applicable in the first instance to payment of the current outgoings, such as rents, rates and taxes, repairs, insurance premiums and the interest on prior encumbrances (n), and the balance is then applicable, firstly, in payment of interest on the mortgage debt and on expenses of improvements and other expenses which the mortgagee is entitled to add to the mortgage debt (o), and, secondly, in payment of the principal and of capital expenditure added to principal (p). Where, however, a mortgagee in receipt of the rents and profits sold goods to the mortgagor from time to time and the latter upon a settlement of accounts assented to the rents and profits being applied first in payment of the account for goods sold, it was held that an encumbrancer whose rights accrued after the settlement could not complain of such application of the rents and profits (q).

A mortgagee taking possession of the lands is entitled as against the mortgagor to all growing crops and all produce of the lands, and if possession be lawfully demanded by the mortgagee any person refusing possession may be restrained from cutting or removing the crops (r). A mortgagee of the land is entitled to take possession of growing crops as against a subsequent chattel mortgagee thereof, but where a mortgagee of the land purchases the equity of redemption from the mortgagor whereby the mortgage becomes merged, an intervening chattel mortgagee is entitled to the growing crops as against a lessee of the mortgagee of the land (s). A mortgagor after default is so far as crops growing upon the mortgaged land are concerned in the position of a tenant at sufferance, and cannot by giving a chattel mortgage upon the crops confer a title thereto upon the chattel mortgagee to the prejudice of the mortgagee of the land or anyone claiming under him who has entered into possession of the land before the crop is harvested (t).

(I) Chapman v. Smith, [1907] 2 Ch. 97; see also chapter 15, Lessee of Mortgaged Land, Sec. 144.

(m) Cockburn v. Edwards, 1881, 18 Ch.D. 449, at p. 457. See also chapter 15, Sec. Sec. 141 and 142.

(n) Bompas v. King, 1886, 33 Ch.D. 279.

(o) As to the right to reimbursement for expenses incurred, see Sec. 303, infra.

(p) 21 Halsbury, Laws of England, pp. 195-197. As to the liability to account for rents and profits, see Sec. 306, infra.

(q) Mitchell v. Saylor, 1901, 1 O.L.R. 458.

If the property covered by the mortgage includes a business carried on upon the mortgaged premises the mortgagee is entitled to carry on the business for a reasonable time and to use the name of the mortgagor for that purpose so that the property may be sold as a going concern, but the mortgagee will be liable for gross negligence in management (u), and will be personally liable upon new contracts made by him (v).